The Case for Experienced Leadership at Startups

In the dot com days it was called “gray hair”. As in “they just brought the gray hair in to be CEO or Chairperson, and the founder is assuming the CTO/President/Evangelist role”. Actually, in those days sometimes the founder was forced out all together. And that wasn’t fair. And of course, the dot com bubble exploded. So the model got chucked.

Starting with the social/local/mobile era a new model emerged. Keep the founders and let them take the helm all the way. But we’re now seeing the results of that experiment and with a few exceptions they’re not that pretty either.

Here’s where I see the dangers of inexperienced leadership:

• No leadership or management role models. I think it’s very difficult to lead and/or manage other people if someone has never been managed. It’s not innate for most people. It’s a learned skill and some people are better than others at it.
• No structural or operational models. One of the reasons data show that startups go through a challenging phase at the 150 people mark is that this is generally time when a formal management structure needs to be put in place. With no big co. experience, it’s hard to know how all the moving parts fit together and what makes the most sense for the company.
• Lack of self-knowledge. This one is the most amorphous but also the most important. Facing challenges, solving problems, the way we react and the resulting outcomes all feed our self-knowledge. They teach us what works, what doesn’t, where we’re strong and where we need help. You can’t go around this one, you have to go through.

Lacking any of these slows a companies trajectory. Pairing this inexperience with the relentless pressure of the venture-backed path is practically investor fraud. Inexpert leaders and managers fail to recruit and retain great people. The people they do get can’t/won’t work at their highest capability. Revising structural and operational models takes time, rework and is hell on productivity. And lack of self-knowledge negatively impacts decision making at every turn.

Interestingly, Zuckerberg/Sandberg gave us a new model almost 10 years ago. It pairs a visionary founder with an experienced operator. There’s also been a broad call for increasing diversity in both the general workforce and leadership as there’s plenty of data to back up the improved performance. So why it’s taking so long for experience and diversity to be required components of a growth-stage management team? Why aren’t investors making Series B (or even Series A) contingent on it? How many scandals and plummeting valuations is it going to take?